Remote working fuels demand for flexible property lease-arrangements

Remote working fuels demand for flexible property lease-arrangements

The push towards more remote and hybrid forms of working is likely to see commercial property landlords becoming 'more flexible' in deals they offer tenants.

That's the view of Paul Davies, Senior Commercial Property Solicitor, who says many tenants are already demanding greater flexibility in their lease-arrangements. He also believes those demands will only increase over time as the working environment changes post Covid.

Paul said: 'Even before the pandemic, businesses were looking at greater flexibility in their letting arrangements.

'Tenants were future proofing by taking on larger premises to cater for expansion and entering into sharing arrangements with other companies in their supply chain to fill extra space in the short term.   The pandemic and flexible working arrangements have brought more focus on how space can be made to work for companies.  Tenants will increasingly look for greater flexibility to expand, contract or ultimate exit their properties.  Sharing space easily without the complexities of formal landlord’s consent will continue to be desirable.  At present the more established institutional landlords are insisting on more anachronistic lease terms, but as more sophisticated tenants offering good covenant strength become alert to the need for change and insist upon flexibility when looking for new space, this should see a change.'

Landlords with high street retail property and large office buildings are among those most likely to have incurred significant losses during the pandemic, due to reduced rents. In some cases, tenants were unable to pay and the temporary ban on evictions, which ended in March 2022, has caused some landlords to struggle to meet their mortgage repayments.

On assigning a lease 'it is important to get early advice on any proposals to assign a lease,' adds Paul. 'Very few leases allow assignment without the landlord's consent.  The requirements contained in a lease to obtain consent are complex with various technical steps needing to be taken before consent will be given – one that we are seeing increasingly being a requirement for a solicitor’s undertaking to pay the landlord’s fees when considering the application.   Also, whilst a lease might list certain requirements, knowing what requests from the landlord are routine and reasonable is something which solicitors are experienced in and can give advice on to avoid delays and process the application as quickly as possible – even with all the information and a well-prepared application it can take several weeks to complete an assignment.'

This article first appeared in Law News in May 2022.

About the Author

Paul Davies

Paul Davies

Senior Commercial Property Solicitor
Paul Davies is an expert in landlord and tenant law, and has considerable experience in a wide range of commercial property work from portfolio management through to investment and development work.

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